For personal use only - Australian Securities Exchange

For personal use only
ASX Announcement
29th December 2014
ASX: QBL
7 Teves 5775
Clarification of 30 October Scoping Study announcement
On behalf of the Directors of Queensland Bauxite (ASX:QBL) (“the Company”), I am delighted to
release the new Scoping Study for South Johnstone Bauxite Project as set out in this announcement,
which supersedes completely the Scoping Study of 30 October 2014. The new Scoping Study sets out
initial production targets and financial forecasts based solely on the now upgraded JORC compliant
Indicated Mineral Resources.
The Company advises that investors, brokers and analysts may only use the current updated scoping
study announcement as a basis for investment decisions and not the previous one released on 30
October which we hereby retract, as we have been advised that in our specific circumstances only a
JORC Indicated Resource together with the appropriate associated disclosures of the modifying factors
to a level which meets the reasonable grounds requirements in the Corporations Act 2001 may be
used when completing and releasing the results of our scoping study. We have been advised that the
release of results of the previous scoping study solely on the basis of JORC Inferred resources alone in
our specific circumstances does not accord with ASX Guidance Note 31, para 8.7 and the Australian
Corporations Act 2001, as Inferred Resources alone is considered to not provide reasonable grounds to
imply economic viability unless under exceptional circumstances. An Inferred resource is a lower
geological level of confidence by comparison to an Indicated resource, as an Indicated resource
enables a greater level of confidence in projecting more accurate production and profitability in the
pre-mining Scoping Study.
Therefore we are pleased to have been able to replace the previous scoping study announcement with
this new Scoping Study announcement which is based solely on the higher confidence level JORC
compliant Indicated Resources as set out in this announcement.
This announcement sets out the Company’s progress over the last few weeks and includes numerous
significant milestones as set out below.
For personal use only
South Johnstone Bauxite Project
Upgrade of Mineral Resource & Updated Scoping
Study Based on the Upgraded JORC Compliant
Indicated Mineral Resource
Key points























The Company’s geological bauxite continuity model has now been confirmed
Upgrade to Higher Confidence Initial JORC Indicated Mineral Resource
The Upgraded Indicated Resource and updated Scoping Study Stage 1 Project are major
milestones in the development of South Johnstone
Low Capex, Low Opex, Payback and Revenues justifies initial production decision
Current initial JORC Indicated Resource area drilled is significantly less than 1% of surface
Exploration Target area
The upcoming program of drilling aims to rapidly further increase Indicated Mineral Resources
tonnages and grade at depth and along strike
New Scoping Study results are based solely on new initial JORC Indicated Resource Stage 1
Project and does not rely on any lower confidence Inferred Resources
Payback of estimated capital costs: <6 months
Annual Gross Revenue: A$42.4m
IRR: 223%
Operating annual positive cash flow before tax (from year 1; Operating Stage 1 Scenario only):
A$12.3M
Average available alumina of 29.7% and reactive silica of 3.2% for current initial Indicated
Resource
Surface drilling returned up to 33.6% available alumina and as low as 1.8% reactive silica
Alumina to silica (A:S) ratio for Indicated Resource is approximately 10:1
Limited deeper drilling to 3m has seen higher alumina, lower silica grades
Recent drilling is down to average of 1.4 metres bauxite depth only
Drilling at depth to follow in upcoming program
Cashed up for development
Potential for increased bauxite production in Operating Scenario Stage 2 Project
Commenced Environmental Approval and Mining Lease preparations
Additional off taker interest received from further commodity trading and alumina refinery
groups
Limited new supplies of seaborne bauxite is forecast on-stream in the next 12 months
Aiming for mining to commence in second half of 2015
The Directors are looking forward to the further development of the South Johnstone Project and to a
most successful 2015 for all our shareholders.
Pnina Feldman
Executive Chairperson
New Scoping Study Based On Indicated Mineral Resources
For personal use only
The Company has upgraded an appropriate portion of its Inferred Mineral resources to a higher level
of confidence with sufficient consideration of mining, processing, metallurgical, infrastructure,
economic, marketing, legal, environmental, social and government factors.
The Scoping Study indicates that South Johnstone Bauxite Project represents a robust bauxite deposit
with a simple mining and quarrying operation to produce a DSO product with a favorable location with
respect to infrastructure and presents a real opportunity to promote sustainable regional development
and development of the project in 2015.
The Directors would note that the initial Indicated Resource that underpins this Scoping Study provides
the basis for progressing the aggressive development of South Johnstone Bauxite Project and the
Scoping Study contains sufficient information to enable the Company to formally commence
environmental approvals and apply for a Mining License in 2015, which process is now being initiated.
Following receipt of this Scoping Study, Queensland Bauxite is aggressively implementing a new drilling
campaign to upgrade further Inferred Mineral Resources to Indicated categories.
The new Indicated Mineral Resource confirmed the geological bauxite continuity model at the South
Johnstone Bauxite Project as a result of recent drilling which has defined an initial Indicated Mineral
Resource.
As drilling continues to increase the Indicated Resources, and results are received, these will be
released to the market in a timely manner.
The Company has concluded that it has a reasonable basis for providing the forward looking
statements included in this announcement. The detailed reasons for that conclusion are outlined
throughout this announcement.
The estimated mineral resources underpinning the Scoping Study production targets have been
prepared by competent persons in accordance with the current JORC Code 2012 Edition.
The focus has been on Area I where further drilling has proven continuity and consistency of results
from surface. In addition, some results were received from limited drilling to a depth of three metres
which returned higher available alumina and lower reactive silica grades.
The upgrade in mineral resources estimation was undertaken by Chief Geologist Dr Robert Coenraads.
Xstract Mining Consultants Pty Ltd provided an additional internal reporting to the Board on the
methodology and efficacy of the approach and provided specialist advice to assist the Competent
Person in developing the Mineral Resource.
Drilling results were received from ALS Laboratories in Queensland and the Indicated Resource
returned an average of 29.7% available alumina and 3.2% reactive silica, which is in line with initial
drilling and proving the geological model of Chief Geologist Dr Robert Coenraads.
Dr Coenraads commented: “We are excited by these results which confirm my original geological
model.”
For personal use only
“The Indicated Resource results are consistent with the first metre of the earlier initial surface results
at Area I which returned an average 29% available alumina and 2.9% reactive silica, which allows for
the slightly lower grades at surface due to topsoil horizon contamination.”
“We expect that with further drilling at depth, the grades should correlate with the original drilling
between one to three metres which produced an average grade of 30.55% available alumina and
1.85% reactive silica.”
““In the most recent drilling, laboratory results returned a high of 33.6% available alumina and it is
anticipated that with further drilling at depth and along strike, we would expect to continue to be able
to convert the sizeable Inferred Mineral resources into a significant Indicated Mineral Resource.”
“In the area of the recent surface drilling down to an average of 1.4 metres, there is now an Indicated
Resource estimate of over 1.9 million tonnes at 29.7% available alumina and 3.2% reactive silica which
is a ratio of almost 10:1 A:S. These tonnages are the tonnages calculated after deducting any areas
covered by or immediately adjacent to sealed roads or other built structures. We are very pleased with
the positive cooperation of the local relevant landowners, who are keen to see the project developed.”
“The Initial Indicated Resource drilled to date represents significantly less than 1% of our previously
reported Exploration Target area, which is very encouraging for our goal of achieving a huge economic
resource.”
The Company had previously reported an Exploration Target area ranging between 193 million tonnes
and 405 million tonnes of expected bauxitisation, of grades ranging from 31.7% available alumina and
1.9% reactive silica with a cut off grade of 20% available alumina and 10% reactive silica. The company
is intending to further refine the Exploration Target parameters and model in accordance with the
requirements of JORC 2012 as the further drilling results are returned on the project area.
The Indicated Mineral Resource estimate is the basis of the operating scenario used in the
independent Scoping Study undertaken for the Project as reported in this announcement. Using solely
the initial Indicated Resource, the capital expenditure is repaid within 6 months of first year’s
production with significant profit margin. Therefore, the viability of the project can be reasonably
expected utilising just the initial Indicated Resource portion alone.
Economic grade bauxite
As reported by The International Committee for the Study of Bauxite, Alumina & Aluminium in 2014,
the average alumina to silica being processed in refineries in China has fallen to an average ratio of
available alumina (Al2O3) to reactive silica (SiO2) of less than 5:1 in 2012. Previously, in 2007, this A:S
ratio was around 7.5:1.
For personal use only
For personal use only
CM Group highlighted this trend of declining alumina to silica ratios in use in refineries throughout
China alongside the rising prices as a result of the looming shortage of bauxite.
In addition, recent exports of Malaysian bauxite at lower grades have been snapped up by Chinese
alumina refineries in 2014.
Of note, industry and analysts report little new supply of bauxite is likely to be on-stream in 2015,
providing opportunities for new bauxite suppliers with favourable infrastructure and CAPEX and OPEX
metrics.
Overall, the macro bauxite picture provides confidence in not only the potential of South Johnstone
bauxite products to find markets for its higher grade bauxite but also for the lower grade bauxite.
South Johnstone bauxite has similar levels of alumina to the bauxite mined in the Darling Ranges of
Western Australia that has average alumina grades of 27-30%. Approximately 20% of the world’s
bauxite is supplied from the Darling Ranges region.
For personal use only
Hand auger surface drilling profiles bauxite at South Johnstone Project
Queensland Bauxite Updated Scoping Study
For personal use only
The level of confidence in the South Johnstone Bauxite Project is greatly enhanced with the initial
Indicated Resource which has enabled the Company to refine the Scoping Study to support the
economics of the Project.
The initial JORC Indicated Resource underpins a revised independent Scoping Study Stage 1 of the
South Johnstone Bauxite which illustrates a technically low risk, low cost, highly profitable bauxite
operation with significant free cash flows.
The updated Scoping Study supports profitable bauxite production by initially mining the higher
confidence Indicated Mineral Resource at South Johnstone.
Project Parameters
The following details the inputs and parameters of the Study that was based on utilising the higher
confidence Initial Stage 1 Indicated Mineral Resource Project defined to date. Drilling is planned to
further increase the Indicated JORC Resources.
The Study to date assessed the viability of an initial mining operation at Area I producing 800,000
tonnes per annum of bauxite.
Key Results of Operating Scenario 1: 800,000 tonnes per annum Stage 1 Project:













Payback of estimated capital costs: <6 months
Capex: A$5.14m
Operating Cost: A$20.87/tonne FOB (not including royalties)
Project Study at A$53.01/tonne bauxite price
Operating Gross Profit Margin: A$32.14/tonne FOB
Royalties: A$5.30/tonne
Current Freight Costs to Shandong, China: A$11.24/tonne
Average annual bauxite production Operating Scenario Stage 1: 800,000 tonnes
Annual Gross Revenue: A$42.4m
IRR: 223%
Operating annual positive cash flow before tax (Stage 1 Project): A$12.3M
Environmental approval application and mining lease application processes underway
Mining estimated start: second half of 2015
Cautionary Statements as required by JORC 2012
Pursuant to JORC Clause 26, the Scoping Study is entirely based on the Initial Indicated Resource which
is a higher confidence category than Inferred Resource.
Pursuant to JORC Clause 38, this announcement refers to a Scoping Study. A Scoping Study is defined
as an order of magnitude technical and economic study of the potential viability of Mineral Resources.
It includes appropriate assessments of realistically assumed modifying factors together with any other
relevant operational factors that are necessary to demonstrate at the time of reporting that progress
to a Pre-Feasibility Study can be reasonably justified.
For personal use only
A Scoping Study is based on lower-level technical and economic assessments, and is insufficient to
support estimation of Ore Reserves or to provide assurance of an economic development case at this
stage, or to provide certainty that the conclusions of the Scoping Study will be realised.
The Company has concluded that it has a reasonable basis for providing the forward looking
statements included in this announcement. The detailed reasons for that conclusion are outlined
throughout this announcement.
Under the independent scoping study scenario, using solely the Indicated Resources, the capital
expenditure is expected to be repaid within 6 months of first years production with significant
operating profit margin remaining. Therefore viability can be reasonably expected utilising only the
current Initial Indicated Mineral Resource.
The estimated mineral resources underpinning the Scoping Study production targets have been
prepared by a Competent Person in accordance with the current JORC Code 2012 Edition.
Executive Chairperson’s Comments
Executive Chairperson Mrs Pnina Feldman said, “The very pleasing results of the South Johnstone
Scoping Study show a highly profitable project which will deliver significant free cash flows already in
the first year.”
“The Company is pleased to be able to report an Initial Indicated Resource. I am confident that with
the continued drilling planned, we should be able to increase the Resource to ensure there is a large
resource to support the Scenario 2 larger and more comprehensive mining operation.”
“Our focus is on generating earnings and building a robust bauxite business as quickly as possible to
enable the Project to add considerable value to QBL shareholders. The existing infrastructure and close
proximity to a deepwater Port with current capacity reduces both the capital cost and lead time to
bauxite production which is reflected in a very quick payback.”
“The study validates the opinion of the Company that South Johnstone ticks all the boxes with low
Capital Expenditure (Capex), low Operating Costs, significant operating margins, fast pay back period
and fast track to production. We are well positioned to become a competitive, highly profitable
producer with a plan that aims to deliver the timely and economic development of the Project.”
“There is potential to develop a much larger mining operation over time which should see revenues
multiplied accordingly.”
“Bauxite mining at surface is perhaps the simplest of all mining operations, as all that is required is
picking up the ore and putting it on the back of a truck. When a project is as close to a deep water port
as South Johnstone is, it is indeed quite fortunate for the company as the infrastructure is already in
place to enable an application for mining to proceed”.
Mrs Feldman said: “The Company will utilise the Initial Stage 1 Scoping Study to further advance
discussions with potential off-takers, stakeholders and financiers, in order to fast track the
development of the Project”.
“The Company will look to develop a larger production scenario in tandem with key stakeholders
including the Port, local and state government departments as well as relevant communities.”
For personal use only
“The Study is a significant milestone for all shareholders, stakeholders and local communities and we
are very excited about the potential benefits to all from project development.”
Summary
The Study was carried out by independent consultants Sandercock and Associates Pty Limited and with
key input from other contributors including independent industry experts and consultants and is based
on the upgrade in the JORC Mineral Resource estimate in this announcement.
The scoping study shows that based on the current technical and market assumptions, the project is
technically and commercially feasible at the lower end of industry operating and capital costs and can
generate strong cash flows.
The Project Development Plan envisages a staged production ramp up commencing at 800,000 tonnes
per annum based on the initial higher confidence category Indicated Mineral Resource (Initial Stage 1)
sufficient for almost 3 years of production which current drilling will look to increase to 10 years
(Operating Scenario 1).
Projected costings and detail regarding any potential larger production scenario (Operating Scenario 2)
will be detailed in a future study which will incorporate advanced mining, production, transport and
shipping options.
The priority is to develop the 800,000 tonnes per annum project into production given that there is
existing infrastructure and Port capacity available to support this level of production.
Capital cost estimate
Table 2 provides the capital cost estimates for the proposed components of the project. The costs are
provided in AUD.
Table 2: Capital cost estimate for producing 800,000 tonnes per annum of bauxite.
CAPITAL ESTIMATE
Port stockpile
Mining License & environment
approvals
Bulk Sampling, drilling
Contingencies including land access
Total
EXPENDITURE
$3,762,900
$430,000
$245,000
$700,000
$5,137,900
Operating cost estimate
For personal use only
Table 3: Operating cost estimate for producing 800,000 tonnes per annum of bauxite.
ITEM
Cost per tonne of ore (including
royalties)
Shipping/tonne to Shandong,
China
ESTIMATE
$26.18
$11.24
Bauxite Price
A bauxite price of AUD $53.01 per tonne has been used in the Financial Model by the independent
Consultant group based on market prices for bauxite of similar grades and specifications as reported in
Area I at South Johnstone. The market for bauxite is forecast to remain strong with the trend to further
price increases in 2015/2016 anticipated by industry experts & analysts including CRU, CM Group,
Metal Bulletin Research.
Mining Schedule
Various mining production scenarios were examined. The scenario that was adopted as the base case
of the Study was a simple mining operation to extract ore from surface to an average of 1.4 metres at
the rate necessary to utilise current available Port capacity of 800,000 tonnes per annum.
Bauxite is to be mined by surface methods (open cut mining). The topsoil is removed to allow for the
simple extraction of the underlying bauxite. The bauxite is to be mined in panels, with the topsoil from
the following panel being placed back into the previously mined panel for a quick rehabilitation of the
area.
Mining is estimated to cost an average of $4.11 per tonne.
Mining production would be campaigned throughout the year. During the wet season, production will
continue with ore being stockpiled if necessary.
Transport
For the purpose of the Study the only transport option considered was direct trucking of bauxite to the
Port of Mourilyan. The project is located 15-25 kilometres west of the Port; the exact distance is
dependent on which areas of the project are mined first.
The loading and transport under this scenario is estimated to cost an average of $5.83 per tonne.
Future studies, including for the increased production in Operating Scenario 2 will investigate
additional transport scenarios such as utilising the current existing rail network that goes directly from
the project area to the port, amongst other transport alternatives.
Port and ship loading costs are estimated to cost an average of $10.51 per tonne.
Drilling program
For personal use only
Continued drilling is planned over the next few months at South Johnstone to increase the Indicated
Resources inventory to support Operating Scenario 1 in later years of production. The ongoing results
will be released to market as and when received.
Well funded
The Company is well funded to continue drilling and drive development of the South Johnstone, as it
has been a central tenet of the Board to conserve resources where possible, and operate the Company
in as frugal an operating structure as possible.
Interest increases from strategic partners, off takers
The Company has fielded additional interest from: potential joint venture partners, refineries,
commodity trading companies and offtakers, financiers to assist in the development of South
Johnstone Bauxite Project given the confidence in the Project and the strong macro demand expected
for bauxite in 2015/16.
The Company has opened a data room and selection process to assist with advancing discussions and
negotiations to short list these above groups and ensure the best development option is selected for
the Company and its shareholders.
Environmental Approvals and Mining Lease
Mining on the Project is not able to take place unless all environmental approvals, mining lease
approvals and land owner access agreements are finalised. Preparations are underway with
appropriate stakeholders and agencies for commencement of the application for environmental
approvals as well as a mining lease to commence mining in the second half of 2015. Although we do
not currently have the relevant approvals to enable the commencement of mining, based on
discussions with the relevant Departments, landowners, local authorities and environmental experts,
the Company has reasonable grounds to believe that the land access approvals, the environmental
approvals and mining lease will be granted as expected in 2015.
Competent Person Statements
The information in this announcement that relates to Mineral Resources underpinning the Production
Target is based on, and fairly represents, information compiled by Dr Robert Coenraads. Dr Robert
Coenraads is a Fellow of the Australasian Institute of Mining and Metallurgy. Dr Coenraads contracts
services to Queensland Bauxite Limited. Dr Coenraads has sufficient experience, which is relevant to
the style of mineralisation and type of deposit under consideration and the activity being undertaken
to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Dr Coenraads has
given his consent to the inclusion in the announcement of the matters based on this information in the
form and context in which it appears.
About Sandercock and Associates Pty Ltd
Mr Sandercock is an independent expert consultant and is the author of the scoping study reported in
this announcement and is the Principal of Sandercock and Associates, a Sydney based mining
For personal use only
consultancy established in 2001 to provide independent mining and management consultancy
services.
Mr Sandercock graduated with a Bachelor of Engineering in Mining Engineering from the University of
NSW in 1974 and has 40 years of metalliferous and precious commodity operations and consulting
experience. He is a Fellow and Chartered Member of the Australasian Institute of Mining and
Metallurgy, a Member of the Mineral Industry Consultants Association as well as being a Member of
the Society of Mining Engineers (United States).
Sandercock and Associates has conducted due diligence reviews of mining operations in Australia, the
Philippines, South Africa, South America and Russia. In particular he was part of a team conducting
due diligence on Russian Aluminium (RUSAL) assets in Siberia as part of the merger of RUSAL, Siberian
Aluminium and Glencore aluminium assets into RUSAL AC one of the largest aluminium producers in
the world. Mr Sandercock also conducted a due diligence on RUSAL’S Guyana bauxite assets.
Sandercock and Associates has conducted scoping, pre-feasibility and bankable feasibility studies to
JORC and NI 43-101 standards on a variety of metals in Central and S.E. Asia, Australia, the Pacific and
South America. In particular Mr Sandercock was on a team conducting a scoping study on bauxite in
the Kimberley region of WA.
About Xstract Mining Consultants Pty Ltd
Xstract Mining Consultants is a diversified technical services group providing professional services in
the areas of geology, geotechnical, mining, processing, and corporate advisory. Xstract provides
strategic and tactical solutions and operational services to resource projects and mining operations
globally in the areas of corporate advisory, technical and consulting services, and project and mine
support.
Mark Noppe, General Manager & Principal Consultant, Xstract Mining Consultants Pty Ltd
Since graduating as a geologist in 1983, Mark has worked in South Africa, Western Australia and
Queensland in exploration, mining geology, practical geostatistical applications, resource estimation,
grade control, mine reconciliation, and professional training and mentoring. Mark’s technical
experience covers a wide range of commodities, geological and mining settings, including bauxite,
gold, nickel laterite, coal, alluvial, eluvial deposits, hard rock diamonds, base metals, industrial
minerals. He has held positions as Chairman of the Southern Queensland branch of the Australasian
Institute of Mining and Metallurgy, and the Geostatistical Association of Australasia.
Mark Noppe holds a Master of Science in Exploration Geology, a Diploma in Terrain Evaluation, and a
Bachelor of Science in Geology and Chemistry, with Honours in Geology. He is also a Fellow and
Chartered Professional Geologist of the Australasian Institute of Mining and Metallurgy and a Member
of the Geostatistical Association of Australasia.
Mark provided specialist advice to assist the Competent Person in developing the Mineral Resource
and has consented to his findings being included in the form and context in which it appears in this
announcement.
1.0
RESOURCE ESTIMATE
For personal use only
1.1
Drilling Programs
As previously reported, QBL had conducted a 60-hole air core drilling program to delineate
areas of bauxite mineralisation for further exploration (Figure 1). The drilling was targeted
as close as possible to the historical bauxite locations identified by CEC so that the 1960s
drilling could be verified. Ground mapping by QBL indicated the most ideal location for
bauxite development to be ridge tops and flanks to the ridges so drilling was sited in these
locations where possible.
A total of 460 m were drilled with each hole averaging 7.5 m in depth. Drilling was
conducted at a spacing varying between 100 m and 5 km. The bauxite mineralisation
forms a surficial deposit developed on flat-lying to gently undulating topography
giving reasonable confidence to interpolate geology and grade across these
distances.
The results indicate that the upper parts of the weathering profiles are relatively
enriched in alumina and depleted in silica in places.
Nearly half of all the holes drilled (29 out of 60 holes) encountered bauxite between
0.5 and 3 m thick and, together with the 10 m topographic data and geologic model
(see Figure 1) a number of areas of bauxite mineralisation were identified, mapped
and earmarked for drilling on a 200 m grid.
Figure 1 shows the location of CEC and QBL drill holes, the QBL bauxite discoveries (known as
Areas A to K in the QBL June 2014 Addendum), and the QBL Exploration Target within EPM
18463.
In the past quarter, QBL conducted a 51-hole auger drilling program on a 200 m by
200 m grid on a two square kilometre (km) plateau in the Camp Creek area (Area I).
This area was chosen as it had the highest grade bauxite at a thickness of 3 m.
Samples were collected over 0.5 m intervals vertical downhole with sample weights
ranging from 1 kg to 2.5 kg recovered from the 62 mm diameter auger. The bauxite
mineralisation forms a surficial deposit developed on flat-lying to gently undulating
topography giving reasonable confidence to interpolate geology and grade across
these distances. The following Figures and Tables show the location of the auger
drilling program.
During November and December 2014 QBL analysed the results of its drilling
program to calculate a JORC Indicated Resource within the Camp Creek area.
An initial Indicated Resource of approximately 1.9 million tonnes (Mt) of bauxite
grading 29.7% available bauxite and 3.2% reactive silica was identified in the
immediate vicinity of Camp Creek and the scoping study is based on those resources
alone. The Company anticipates that Inferred Resources of similar grades in that
area will be converted to Indicated Resources over the coming months.
Based on the results and mapping to date in EPM 18463 QBL has previously reported
an Exploration Target area ranging between 193 million tonnes and 405 million
tonnes of expected bauxitisation, of grades ranging from 31.7% available alumina
and 1.9% reactive silica with a cut off grade of 20% available alumina and 10%
reactive silica. (published in the June 2014 Addendum).
For personal use only
The Company has a planned exploration program over the coming year to test these
areas of bauxite mineralisation to JORC Code 2012 standard using a 200 m grid of
auger holes.
For personal use only
Figure 1: Exploration Drilling, Bauxite Mineralisation and Exploration Target in EPM 38463
For personal use only
1.2
Area I Location and Geology
The bauxitised basalt plateau making up Area I is low relief, falling gently in elevation from
west to east; a fall of about 20 m over a distance of about 3 km. The higher ground
immediately to the west is made up of older silica rich basement rocks. The plateau area
was previously defined as being bauxitic as a result of analytical work carried out on samples
recovered from air core hole SJAC 052. This hole encountered 3 m of bauxite of average
grade 30.2% available alumina (Av Al2O3) and 2.2% reactive silica (Rx SiO2).
The edge of the bauxite is marked by the 80 m Above Sea Level (ASL) contour on the western
end of the plateau and 60 m on the east. The geologic model assumes that the bauxite has
been eroded away in these younger features. Bauxitic soil profiles bottoming on hard basalt
bedrock can be seen in some of the surrounding creek beds.
1.3
Sampling and Analysis
1.3.1
Air Core
The following sampling and analysis was undertaken on the air core samples as were
previously reported upon:





Samples showing potential to be bauxite based on hand-held XRF were selected
for low temperature alkali leach testing.
Selected bauxite samples were re-analysed by high temperature leach testing to
determine if there were further gains to be achieved in the recovery of available
alumina from high temperature processing.
Selected samples were selected for multi-screen testing (four samples of around
0.9 – 1.2 kilograms [kg] were sieved using the 2.5 millimetre [mm], 1.2 mm, 0.9
mm, 0.6 mm and 0.3 mm screens) to see if grade beneficiation could be achieved
for different size fractions.
Selected bauxite samples were chosen for XRD analyses to determine the
mineralogy present.
Selected samples from drill holes were chosen for XRF analyses. Total alumina
results could then be compared directly with those obtained from the earlier
drilling by CEC.
Low Temperature Alkali Leach Testing


A total of 73 drill samples were selected by a hand-held XRF device and tested by
low temperature alkali leach for available alumina and reactive silica. It was
assumed that samples rejected by hand-held XRF selection because of low total
alumina and total silica levels would lie below the bauxite cut-off grade.
Bauxite was recovered in 29 out of the 60 holes after applying a cut-off grade of
20% available alumina and 10% reactive silica. These holes were used to
determine the average thickness and grade for the bauxite mineralisation within
EPM 18463.
High Temperature Alkali Leach Testing
For 15 samples tested, available alumina recovered by high temperature alkali
leaching was only marginally higher than that recovered by low temperature alkali
leaching. There was a marginal increase in reactive silica for the samples tested by
high temperature alkali testing compared to low temperature alkali testing.
Dry Multi-screen Testing
For personal use only
Three bauxite and one sub-grade bauxitic grade samples were selected for multiscreen analysis to test the grade recovery at different sieve sizes. Samples of around
0.9 – 1.2 kg were sieved using the 2.5 mm, 1.2 mm, 0.9 mm, 0.6 mm and 0.3 mm
screens.
Results across the size categories of the screening on these samples indicate that
that beneficiation by screening does not seem to be worthwhile. Further work may
be done in this regard on samples from different areas of the deposit in the future.
XRD Analysis
Three bauxite and one sub-grade bauxitic grade samples were selected for x-ray
diffraction (XRD) analysis to determine the mineralogy present.
The dominant mineral phase present in the samples is gibbsite (36-48%). Other
aluminium phases requiring high temperature processing are either absent or in very
low concentration (Boehmite 0-2% and Diaspore 0-3%). Various iron-rich phases are
present and clays make up 5-9% of the bauxites, rising to 16% in one sample explaining
its higher reactive silica.
XRF Analysis
Ten samples were selected for x-ray fluorescence (XRF) analysis to determine the
elemental oxides present in the bauxite.
The samples returned a relatively high iron content (25% to 31% Fe2O3) with high
water content (18.9% to 23.2% loss on ignition [LOI]). The total alumina lies in the
range from 32% to 38% Al2O3 and these results compare directly with the results
reported by the Carpentaria Exploration Company (CEC) of 31% to 37% reported by
Znebejanek (1961).
All of the above is a summary of previous work and has been previously reported in
greater detail by the Company.
1.3.2
Auger Drilling
A hand auger drilling programme was recently undertaken over a section of Area I.
The hand auger holes failed to penetrate the total thickness of the flat lying bauxite
body as the ground proved to be too hard. The maximum depth reached by hand
was 2 m with the remainder of the holes reaching between 1 m and 1.5 m into the
bauxite body and between 0.5 m and 1 m in the surrounding non-bauxite ground.
Future exploration programs will be carried out using a mechanised hand auger
system which will allow penetration of the full bauxite thickness which is assumed
from air core hole SJAC052 to be around 3 m in this area
Samples from the first 0.5 m to a maximum depth of 3 m in the drill holes were
selected for low temperature alkali leach testing.
Sixty eight samples from the auger program were sent to ALS for analysis for
available alumina and reactive silica using a standard alkali leach (sample leached in
10 millilitres of 90 grams per litre NaOH at 1430C for 30 minutes). The results
support the geologic model returning bauxite from all holes drilled on the plateau
surface with the remaining holes on the flanks of the structure and in the
surrounding valleys returning analyses that were not bauxitic (Av Al2O3 of less than
20% and Rx SiO2 greater than 10% - a total of 29 samples). The results for the auger
drilling program are shown in Appendix A Tables 1 & 2.
For personal use only
1.3.3 Density test work
A dry bulk density value of 1.43 dry tonnes per cubic metre (t/m 3) was used for the
resource calculations. This figure is an average of three bulk density tests carried out
in different areas across the surface at Camp Creek and shown in Table 3.1. Tests
were conducted on level areas of hard, compact, unvegetated and undisturbed
surface with sample weights approaching 5 kg each used to minimise measurement
error. Samples were taken with a small spade, weighed on a set of scales with 50 g
divisions and bagged. The neat hole was lined with a thin plastic bag and filled to the
top with water poured in from a measuring bottle with 10ml divisions. The samples
were reweighed following being dried in an oven at 1100C for 120 minutes.
As the three samples are from the surface only, it is proposed to test the bulk
density through the entire bauxite profile at a later stage. It would be expected for
the densities to be higher at depth, which would then further increase the resource
tonnages if that is proven to be the case.
Table 3.1: Camp Creek Bauxite Bulk Density Tests
1.4
Test location
SJHA 040
SJHA-014
SJHA-023
Average
Sample weight (kg)
Dry sample weight (kg)
Sample pit volume (L)
Density
Dry density
4.85
4.15
2.99
1.62
1.39
4.51
3.98
2.81
1.60
1.42
4.75
4.45
3.00
1.58
1.48
1.60
1.43
Resource Modelling
1.4.1
Modelling Parameters
Bauxite mineralisation occurs at surface in a weathering profile that is known from
the drilling to extend from 0 m to a depth of about 3 m. It is found as a continuous
blanket overlying flat-lying basalt flows of the Atherton Province within EPM18463.
The deposit has been formed by weathering of the basalt surfaces with resultant
leaching of silica downwards and concentration of alumina towards the surface of
the profile. It is not clear how much of the material is in-situ or if some
transportation has been involved, however in approximately half of the holes a
gradual decline in alumina and increase in silica with depth is noted in the first few
metres indicating an in-situ profile.
1.4.2
Sampling
Contamination was avoided by ensuring that the hole was completely clean before
each successive sample was taken such that the auger could be lowered smoothly
and cleanly to the top of the next interval and that the auger was not turned outside
of the sampling interval either during entry or exit from the hole.
The average grade of bauxite (Av Al2O3 and Rx SiO2) in each hole was mapped and
contoured using 5% Rx SiO2 grade contours as shown in Figure 2.
For personal use only
The 68 half-metre bauxite samples were also sorted in order of increasing reactive
silica and graphed on Figure 4. These data show an inverse linear relationship
(decreasing available alumina with increasing reactive silica). Sorting the samples in
this way enables grouping of data into various categories each with their own
respective areas, volumes, tonnages and grades. A polygonal model was prepared to
achieve an optimal tonnage versus grade model to support the project economics.
For personal use only
Figure 2: Camp Creek Auger Drilling Showing RX SiO2 Grade Contours
Figure 3 shows the average thickness of the bauxite achieved in the unbottomed auger holes. These
thicknesses are expected to be increased with further drilling which should significantly increase the
resource tonnages.
For personal use only
Figure 3: Camp Creek Auger Holes, Bauxite Thicknesses and Resource Blocks
For personal use only
Figure 4: Rx SiO2 versus Av Al2O3 in Camp Creek Area I
The model polygons chosen for this analysis are shown in Figure 3 with the outer
boundary being the 5% Rx SiO2 contour. The 5% Rx SiO2 contour was divided into
twelve polygons, each enclosing between 1 and 4 holes and excluding roads, houses
and other infrastructure. These holes included in the easternmost 10 polygons were
used to create an average grade of 29.7% Av Al2O3 and 3.2% Rx SiO2 and average
thickness of 1.4 m for the model area shown in Figure 3.
The drilled shallower portion of bauxite mineralisation at Camp Creek (i.e. that
portion intersected by air core and auger drilling in the 5% Rx SiO2 grade contour and
only that in the easternmost 10 polygons (blocks 3 to 12) was chosen for upgrade to
JORC Code Indicated Resource in the modelling exercise. Blocks 1 to 2 were
excluded due to lower grade. Similarly bauxite lying inside the 10% Rx SiO2 contour
but outside of the 5% Rx SiO2 contour was also excluded.
Geostatistical analyses of the exploration data prepared by Mark Noppe of Xstract
Group show that the 200 m spacing of samples is sufficient to support the
assumption of geological and grade continuity between the sample points,
particularly for Av Al2O3 and, although less certain, probably also Rx SiO2.
Volume calculations were made using the surface area defined by the 5% Rx SiO2
grade contour as indicated by the drilling and topographic constraints multiplied by
the average bauxite thickness of 1.4 m calculated for the modelled area. It is known
that that the true average thickness must lie somewhere in between 3 m (SJAC052,
the deepest hole) and 1 to 1.5m - the thickness encountered routinely in the
incompletely drilled auger holes. For modelling Indicated Resources, holes that end
in bauxite and were less than the average bauxite thickness of 1.4 m in depth have
been extrapolated to that average bauxite depth. In other areas within the 200 m
range of influence where holes have ended in bauxite, the depth of the deepest
bauxite intercept has been applied to estimate the thickness of bauxite within that
range.
Polygon volumes were converted to resource tonnages using a dry bulk density value
of 1.43 t/m3.
Modelling resulted in a JORC Code Indicated Resource of 1.9 Mt of average grade of
29.7% Av Al2O3 and 3.2% Rx SiO2 as shown in Table 3.
For personal use only
1.4.3
JORC Code Classification
The JORC Code classification is based on the coverage of holes on a 200 m by 200 m
grid over most of Camp Creek (51 auger holes and 1 aircore hole with bauxite
recovered in most of those into a geological model. Modifying factors considered
included mining, metallurgical, infrastructure, economic, marketing, legal,
environment, social and government issues. Based on this understanding, a select
portion of the bauxite mineralisation at Camp Creek (1.9 Mt at 29.7% Av Al2O3 and
3.2% Rx SiO2) has been classified as a JORC Code Indicated Resource.
The mineral resource estimates and modifying factors have been audited and
reviewed by Sandercock and Associates Pty Ltd. Geostatistical analysis of the drilling
data from Camp Creek was carried out by Mark Noppe Xstract Group who also
provided advice and reviewed the modelling discussion and assumptions in JORC
Code Table 1 (see Table 2).
1.4.4
Other Considerations
Although there are no known environmental restriction to development of the
Project, no detailed environmental studies have been conducted at present. The
land on which the bauxite mineralisation occurs is currently being used for large and
small acreage agricultural activities, principally sugar cane and bananas. It is
assumed that a mining licence would be granted by government for an open cut
extraction operation. It is also assumed that no unforeseen environmental
difficulties, landholder, or other issues would impact on the mining and processing
operation.
1.4.5
Risk Factors
Following is a list of the factors that could affect the relative accuracy and
confidence of the estimate:


The estimate of bauxite thickness: this varies between 0.5 m and 3 m in holes
drilled in the Camp Creek area with a mean of 1.4 m. This is a minimum
thickness estimate as when these holes are deepened it is assumed that further
resource will be intersected. The bauxite dry bulk density has been measured at
1.43 t/m3 at the surface and this value has been used for modelling. It is planned
to make further density measurements at depth in the future.
The mineral resource estimate is based on the assumption that geology and
grade is continuous between 200 m spaced bore holes.
1.5
Resource
For personal use only
The resulting resource is shown in Table 3.2.
Table 2: Camp Creek Indicated Resource Estimate Based on 5% Rx SiO2 Contour
Area &
depth
Area
2
(m )
Thickness
(m)
Volume
3
(m )
Tonnage
(t)
Av Al2O3
RxSiO2
(%)
(%)
1 (av)
44,680
1.40
62,383
89,207
23.8
5.0
2 (av)
92,440
1.40
129,066
184,564
23.5
4.9
3 (av)
12,700
1.40
17,732
25,357
28.1
4.5
3 (1.5)
27,300
1.50
40,950
58,559
4 (av)
41,940
1.40
58,557
83,737
28.2
4.1
4 (1.5)
72,830
1.50
109,245
156,220
5 (av)
61,640
1.40
89,581
128,101
31.4
2.9
6 (av)
97,650
1.40
136,340
194,966
32.1
2.7
6 (1.65)
26,650
1.65
43,973
62,881
7 (av)
22,656
1.40
31,633
45,235
32.5
2.7
7 (1.65)
33,990
1.65
56,084
80,199
8 (av)
42,660
1.40
59,562
85,174
29.5
3.1
8 (3)
56,450
3.00
169,350
242,171
8 (2)
8,206
2.00
16,412
23,469
9 (av)
86,950
1.40
121,400
173,603
29.2
3.1
9 (3)
35,270
3.00
105,810
151,308
9 (2)
26,610
2.00
53,220
76,105
10 (av)
87,500
1.40
122,168
174,701
27.6
4.1
10 (3)
3,946
3.00
11,838
16,928
11 (av)
4,879
1.40
6,812
9,741
31.9
2.3
11 (1.5)
17,030
1.50
25,545
36,529
12 (av)
22,392
1.40
31,624
44,707
31.9
2.3
12 (1.5)
35,590
1.50
48,885
69,906
Total Areas 1 - 12
Total Areas 3 – 12
only
961,479
1.61
1,547,808
2,213,366
29.0
3.4
824,359
1.64
1,356,360
1,939,595
29.7
3.2
2.0
APPENDIX A - AUGER HOLE ANALYSES
Appendix A - Table 1 Camp Creek Auger Drill Hole Sample Analyses
For personal use only
APPENDIX B -Table 1 CAMP CREEK AUGER DRILL HOLE SAMPLE ANALYSES
Sample Number
Auger
SJHA 009 0.0-0.5
SJHA 010 0.0-0.5
SJHA 011 0.0-0.5
SJHA 011 0.5-1.0
SJHA 011 1.0-1.5
SJHA 012 0.0-0.5
SJHA 012 0.5-1.0
SJHA 013 0.0-0.5
SJHA 013 0.5-1.0
SJHA 014 0.0-0.5
SJHA 014 0.5-1.0
SJHA 015 0.0-0.5
SJHA 016 0.0-0.5
SJHA 017 0.0-0.5
SJHA 017 0.5-1.0
SJHA 018 0.0-0.5
SJHA 018 0.5-1.0
SJHA 019 0.0-0.5
SJHA 019 0.5-1.0
SJHA 019 1.0-1.5
SJHA 020 0.0-0.5
SJHA 021 0.0-0.5
SJHA 022 0.0-0.5
SJHA 023 0.0-0.5
SJHA 024 0.0-0.5
SJHA 025 0.0-0.5
SJHA 026 0.0-0.5
SJHA 027 0.0-0.5
SJHA 027 0.5-1.0
SJHA 028 0.0-0.5
SJHA 029 0.0-0.5
SJHA 030 0.0-0.5
SJHA 030 0.5-1.0
Al-LICP01
Si-LICP01
Sample Number
%Av Al2O3 % Rx SiO2
Auger
0.6
15.3 SJHA 031 0.0-0.5
15.1
13.4 SJHA 031 0.5-1.0
24.0
5.9 SJHA 032 0.0-0.5
25.8
5.5 SJHA 032 0.5-1.0
22.4
7.3 SJHA 033 0.0-0.5
17.5
10.8 SJHA 033 0.5-1.0
15.7
13.5 SJHA 034 0.0-0.5
26.5
4.2 SJHA 034 0.5-1.0
26.9
4.6 SJHA 035 0.0-0.5
28.0
3.6 SJHA 035 0.5-1.0
28.8
4.1 SJHA 035 1.0-1.5
15.7
13.1 SJHA 036 0.0-0.5
15.3
12.5 SJHA 037 0.0-0.5
30.1
3.2 SJHA 037 0.5-1.0
30.4
2.7 SJHA 038 0.0-0.5
23.1
6.8 SJHA 039 0.0-0.5
23.4
7.0 SJHA 039 0.5-1.0
30.4
2.7 SJHA 040 0.0-0.5
32.4
2.1 SJHA 040 0.5-1.0
33.0
2.0 SJHA 041 0.0-0.5
0.4
21.8 SJHA 042 0.0-0.5
3.9
12.7 SJHA 043 0.0-0.5
5.4
14.0 SJHA 044 0.0-0.5
14.1
9.7 SJHA 044 0.5-1.0
3.2
17.0 SJHA 045 0.0-0.5
0.5
21.8 SJHA 045 0.5-1.0
0.5
13.7 SJHA 045 1.0-1.5
23.2
5.4 SJHA 045 1.5-2.0
23.5
4.6 SJHA 046 0.0-0.5
0.5
15.0 SJHA 046 0.5-1.0
12.7
14.4 SJHA 046 1.0-1.5
23.7
5.4 SJHA 047 0.0-0.5
23.9
4.6 SJHA 047 0.5-1.0
Al-LICP01 Si-LICP01 Sample Number
Al-LICP01
Si-LICP01
%Av Al2O3 % Rx SiO2
Auger
%Av Al2O3 % Rx SiO2
23.2
4.9 SJHA 048 0.0-0.5
18.3
16.5
24.0
5.0 SJHA 049 0.0-0.5
0.3
8.7
17.4
10.5 SJHA 049 0.5-1.0
0.4
14.2
13.6
15.1 SJHA 050 0.0-0.5
4.5
16.4
23.3
5.1 SJHA 051 0.0-0.5
26.8
5.3
23.7
4.3 SJHA 051 0.5-1.0
27.1
5.5
22.8
7.3 SJHA 052 0.0-0.5
30.0
3.0
14.6
11.5 SJHA 052 0.5-1.0
32.5
2.6
28.3
3.5 SJHA 053 0.0-0.5
30.6
3.0
29.2
3.1 SJHA 053 0.5-1.0
32.6
2.9
27.7
3.6 SJHA 054 0.0-0.5
13.8
14.6
20.7
9.0 SJHA 055 0.0-0.5
25.0
5.7
21.6
9.1 SJHA 055 0.5-1.0
27.7
5.1
21.0
9.5 SJHA 056 0.0-0.5
32.2
2.5
23.1
7.5 SJHA 056 0.5-1.0
33.6
2.5
25.3
5.6 SJHA 056 1.0-1.5
32.4
2.8
26.7
5.7 SJHA 056 1.5-1.65
29.8
3.6
25.4
4.5 SJHA 057 0.0-0.5
26.9
5.1
28.3
4.1 SJHA 058 0.0-0.5
26.9
4.7
0.6
12.5 SJHA 058 0.5-1.0
29.6
4.3
0.2
20.8 SJHA 058 1.0-1.5
29.4
4.7
0.4
10.8 SJHA 059 0.0-0.5
26.5
4.3
19.9
8.9 SJHA 059 0.5-1.0
28.3
4.4
21.0
8.8 Air core
28.3
3.6 SJAC 052 0.0-1.0
29.4
2.9
30.3
2.9 SJAC 052 1.0-2.0
31.7
1.8
29.4
3.8 SJAC 052 2.0-3.0
29.4
1.9
25.8
5.8 SJAC 052 3.0-4.0
16.5
13.4
24.9
6.0 SJAC 052 4.0-5.0
5.2
24.4
25.4
6.2
23.8
7.8
17.8
10.2
14.7
14.5
APPENDIX A - Table 2 CAMP CREEK DRILL HOLE COLLARS
For personal use only
Hole Number
Zone 55K
SJHA 009
SJHA 010
SJHA 011
SJHA 012
SJHA 013
SJHA 014
SJHA 015
SJHA 016
SJHA 017
SJHA 018
SJHA 019
SJHA 020
SJHA 021
SJHA 022
SJHA 023
SJHA 024
SJHA 025
SJHA 026
SJHA 027
SJHA 028
SJHA 029
SJHA 030
SJHA 031
SJHA 032
SJHA 033
SJHA 034
SJHA 035
SJHA 036
SJHA 037
SJHA 038
SJHA 039
SJHA 040
SJHA 041
SJHA 042
SJHA 043
SJHA 044
SJHA 045
SJHA 046
SJHA 047
SJHA 048
SJHA 049
SJHA 050
SJHA 051
SJHA 052
SJHA 053
SJHA 054
SJHA 055
SJHA 056
SJHA 057
SJHA 058
SJHA 059
SJAC 052
Easting
Northing
Collar Elev
GDA94 nE
388604
388597
388605
388400
388401
388402
388998
389205
389201
387411
389401
386201
386199
386612
386802
386993
386801
386601
387001
387000
387001
387201
387201
387200
387401
387402
388002
388206
388199
388001
388201
388996
388000
387990
388201
388200
388798
388802
389000
388800
389001
389203
389400
388401
388000
387801
387401
388815
389132
387802
387599
388713
GDA94 nN
8050003
8050197
8050401
8050199
8050399
8050602
8050813
8050591
8050425
8050601
8051200
8050233
8050408
8050600
8050600
8050779
8050799
8050791
8050400
8050200
8050599
8050601
8050400
8050200
8050401
8050200
8050200
8050200
8050399
8050402
8050598
8050392
8049996
8049797
8049799
8050002
8050401
8050200
8050200
8050003
8049999
8049999
8050591
8050800
8050801
8050800
8050800
8050894
8051023
8050428
8050418
8050515
m asl
58
70
75
72
73
78
62
62
71
85
68
122
102
74
75
61
72
79
85
78
77
83
85
78
85
78
75
74
75
81
80
75
72
68
53
73
75
73
67
62
55
56
65
72
75
68
81
68
63
83
85
73
For personal use only
Section 1: SAMPLING TECHNIQUES AND DATA
Criteria
Explanation
Sampling techniques
Hand Auger drilling of vertical holes to a depth of 0.5 m to 2.0m,
depending on the depth of the ground, was carried out to
recover 0.5 m sample intervals downhole (holes SJHA 009 to 059)
over the area of bauxite mineralisation known as Camp Creek
(Area I). Holes were backfilled immediately after sampling.
Material was collected in a drawstring calico bag. The entire
drilled half metre sample was collected to assure an appropriate
sample size. Each bagged sample was weighed at the laboratory
on receipt and these weights varied between 1 to 2.5 kg. The
hole was drilled to refusal depth which varied between 0.5 and
2.5m depth in the hard dry soils of that area. The samples from
each hole, after testing with hand-held XRF, were sent to ALS
Brisbane. In the ALS laboratory. samples were riffle split and
1000g pulverized to 85% < 75 micron then analysed for available
alumina (according to process Al-LICP01) and reactive silica (SiLIP01) using an ICP-AES instrument (Leach conditions – 1g
leached in 10ml of 90gpl NaOH at 143 degrees for 30 minutes).
Leach tests of selected samples at higher temperature showed
no significant gain in available alumina with XRD analyses
supporting these observations by showing the bauxite
mineralogy to be predominantly gibbsitic (i.e. amenable to low
temperature leaching) Analytical data are presented in Appendix
A - Table 1, with collar coordinates presented in Appendix A Table 2.
Drilling techniques
Auger drilling was carried out under close supervision to ensure a
high standard of sample collection, (to avoid contamination from
shallower intervals), using a Dormer 62mm diameter soil auger
with a 600mm wide T-handle. Contamination was avoided by
insuring that the hole was completely clean before each
successive sample was taken such that the auger could be
lowered smoothly and cleanly to the top of the next interval, and
that the auger handle was not rotated outside of the sampling
interval either during entry or exit from the hole. It is planned to
compare a selection of auger hole results with those obtained by
a different drilling methodology to ensure that no contamination
downhole is occurring with deeper drillholes.
Drill Sample
Recovery
Samples collected in calico bags labelled with hole number and
depth interval. Representative samples collected in chip trays
labelled by hole number and interval. Samples collected are
noted in a field log book. The entire sample interval was
collected and no loss of fines was noted.
For personal use only
Logging
Samples described geologically on site in a specifically designed
logbook with the first sample from each hole sent for analysis
(available alumina and reactive silica). The remainder of the hole
to be submitted contingent on positive results in the 0.0-0.5m
interval.
Sub-sampling
techniques and
sample preparation
Bagged samples were not subsampled. Samples were prepared
by ALS in Brisbane to industry standards according to the
techniques described above in sampling techniques. The material
was soft and friable and of grain size fine. Cream white gibbsite
nodules up to several cm were noted in certain areas
Quality of assay
data and laboratory
tests
Samples were weighed and analysed by ALS Minerals according
to their industry standards. Results for Avail-alumina and Rxsilica presented to 0.01% accuracy. A QC certificate
(BR14078034) was issued by ALS containing 2 standards, 2 blanks
and 2 duplicate samples showing acceptable levels of accuracy
(ie lack of bias) and precision have been established. The
duplicate samples varied by up to 0.2% available Al2O3 and 0.2%
Rx SiO2
Verification of
sampling
and assaying
Location of Data
Points
Sampling was carried out by independent laboratory ALS with
standards and blanks. Assay results are presented as reported
with no adjustment. Holes SJHA 038 and SJHA 055 were
analysed in duplicate and the results presented in a QC
certificate. Variation between the duplicates was 0.2% available
alumina and 0.2% reactive silica.
Drill hole collars were located using hand-held GPS (accuracy 5
m) based on a pre planned 200m x 200m grid.
Coordinates recorded in GDA94. Topographic control to +/- 5m
provided by digital elevation model (DEM) supplied by Geoimage
Pty Ltd, covering the 1:100,000 topographic sheets; Atherton
7963, Bartle Frere 8063, Ravenshoe 7962 and Tully 8062.
Coordinates are stored in the GPS memory for later download
and also hand recorded in the field geologist. Auger drill collar
coordinates are presented in Appendix A - Table 2.
For personal use only
Data spacing and
distribution
Camp Creek (Area I) within EPM18463 was drilled at a grid
spacing of 200m x 200m over the majority of target geological
unit (Atherton Basalt Terrain), inferred as a 10 Mt resource by
the previous Aircore drilling program. Certain gaps in the data
coverage that can be seen on Figure 2 resulted from physical
inability to access the site or landowner access problems. This
resulted in a spacing of up to 400m between certain drill holes.
The deposit is a surficial deposit formed on flat-lying to gently
undulating topography giving high confidence to interpolate
geology and grade across these distances – suitable for
estimation of indicated resources. Samples were collected at 0.5
m intervals downhole. Bauxite samples in each hole were
averaged. Non-bauxites (i.e. those with >10% Rx SiO2 and <20%
Av Al2O3) were not included in the average calculations. It is
proposed to further test the assumption of the suitability of a
200m drill spacing with a test area of at least 200m by 200m with
a cross of holes drilled at 25m spacing to detail the potential
grade variability and thickness variability of bauxite on a local
scale (i.e. shorter than the 200m spacing) – this will be crucial for
testing the spacing at which data may be required to better
define the DSO qualities and quantities for actual mining.
Orientation of data
inrelation to
geological structure
The bauxite mineralisation at Camp Creek (Area I) is considered
as a planar horizontal sheet of approximately 1 to 3 m thick
located at surface (surficial deposit developed on weathered top
of flow basalts of the Atherton Province). Shallow vertical drilling
was carried out on a 200m x 200m grid over the deposit sampling
the mineralisation at right angles to the planar sheet (i.e. yielding
a true thickness). The first half metre sample 0.0-0.5m was
analysed to determine the aerial extent of the mineralisation
with the boundary clearly conforming with topography. The
deeper samples were then analysed.
Sample security
Samples were shipped in sealed boxes by TNT road transport to
ALS minerals in Brisbane. Samples and pulps securely stored by
ALS for the duration of the project
Audits or reviews
Calculations and conclusions drawn from analytical work carried
out on the air core and hand auger drill samples have been
audited and peer reviewed by Heath Sandercock of Sandercock
and Associates as part of an independent technical study. Drill
hole analytical data, hole spacing and grade continuity
assumptions, and this JORC Code Table 1 have been reviewed by
Mark Noppe of Xstract Group.
For personal use only
SECTION 2: REPORTING OF EXPLORATION RESULTS
Criteria
Explanation
Mineral tenement
and land tenure
status
The Exploration Permit EPM 18463 is held by Volcan Queensland
Bauxite Pty Ltd (80%) and South Johnstone Bauxite Pty Ltd (20%);
both these companies are 100% owned by Queensland Bauxite
Limited. The tenement is secure at the present time.
Exploration done by
other parties
Exploration in the area was carried out by Carpentaria
Exploration Company in the 1960s. Znebejanek (1961) reported
results for total (acid soluble) alumina rather than for alkali leach
and results for silica were not reported. Location of CEC drill
holes are shown as yellow diamonds on Figure 1
Geology
Bauxite mineralisation occurs at surface in a weathering profile
that is known from the drilling to extend from surface to a depth
of about 3m. It is found as a continuous blanket overlying flatlying basalt flows of the Atherton Province within EPM18463.
The deposit formed by weathering of the basalt surfaces with
resultant leaching of silica downwards and concentration of
alumina towards the surface of the profile. In at least half of the
Aircore holes drilled, a gradual decline in alumina and increase in
silica with depth was noted in the first few metres indicating an
in-situ weathering profile over basalt.
Drill Hole
Information
Date, GDA94 Zone 55K collar coordinates, collar elevation, hole
depth and bauxite thickness for the 51 auger holes and 1 air core
hole drilled over the Camp Creek area (Area I) are presented in
Table 3.
Analytical data (Available Alumina and Reactive Silica analyses)
for each of the 52 holes are presented in Table 2.
No material data have been excluded.
For personal use only
Data aggregation
methods
The results for Camp Creek (Area I) were plotted on DEM
topography and, together with the elevation data, modelled and
contoured according to the reactive silica in the sample (Figure
3.2). Of the 52 holes drilled, 28 holes contained bauxite (defined
as <10% Rx SiO2 and >20% Avail Al2O3). The 10% Rx SiO2
contour and outer edge of bauxite mineralisation conforms with
the edge of the remnant plateau at Camp Creek. This plateau
(>1.5ma weathering surface as shown on Figure 2) varies in
elevation by no more than 20m and corresponds with the 60, 70
and 80m asl contours. Within the <10% Rx SiO2 boundary, holes
with lower reactive silica values lie in well defined areas and are
enclosed by a <5% Rx SiO2 boundary. Seventeen of the holes
(grouped into 12 polygonal blocks) are enclosed by the <5% Rx
SiO2 contour and these higher grade data were aggregated for
the purposes of estimating a JORC Code Indicated Resource of
suitable average grade and tonnage required by the Sandercock
and Associates scoping study for mining startup. These resource
areas are shown on Figures 3 & 5.
Relationship
between
mineralisation
widths
and intercept
lengths
Bauxite mineralisation occurring as part of a surface weathering
layer can be modelled as a thin horizontal tabular body.
Vertical drill holes perforated this horizontal body at right angles,
and therefore all down hole mineralisation intercept lengths are
true thicknesses.
The only hole penetrating the full thickness of the horizontal
bauxite sheet is air core hole SJAC052. This hole indicates a
thickness of at least 3m. This hole lies on the boundary of blocks
8 and 9
Diagrams
Figure 1 shows the location of EPM18462, collar locations of CEC
and QBL air core holes drilled, bauxite discoveries and
exploration target area. Figure 2 shows bauxite mineralisation
and reactive silica grade contours at Area I, Camp Creek. Figure 3
shows how the 5% contour has been divided into polygonal
modelling blocks), in relation to topography and the collars of all
drilling in and around this body
Balanced reporting
All exploration data (ALS analytical results and their location and
depth range, etc) are presented in the report – grade averages,
number of samples used, and maximum variation from the mean
are presented and explained.
For personal use only
Other substantive
data
All exploration data collected at Camp Creek pertinent to the
resource calculation (bauxite thickness and grade - available
alumina and reactive silica - data) have been included here.
Other mineralogical test work carried out on selected samples,
includes high temperature leach testing, multi screen testing to
determine suitability of bauxite to beneficiation, XRD analyses to
determine bauxite mineralogy (predominantly gibbsitic), multi
element XRF analyses to determine range of elemental oxides
and their concentration present in the bauxite. The results of
these tests have been previously reported to market, and are
reported in the 2014 annual report for EPM18463 to the
Queensland Department and in the 2014 Scoping Study by
Sandercock and Associates - Appendix A - Tables 3, 4 & 5.
Further work
Further drilling is required to define the true thickness of the
bauxite body at Camp Creek which is currently inferred as 3
vertical metres based on hole SJAC052. Ground hardness has
prevented any of the auger holes penetrating beyond 2 metres in
this area to date. A motorised auger is now being investigated to
achieve this.
An auger drilling program on a grid of 200m x 200m will be
conducted on the remainder of the bauxitic areas defined by the
2011 drilling. A shallow auger drilling program on a broader grid
of 400 sq m within the 250 sq km Atherton Basalt target area is
proposed (1600 points) to define further mineralisation within
the remainder of EPM18463.
At present the entire area of the Atherton basalt remains
prospective with a 48% success rate achieved (29 out of 60 holes
in aircore drilling to date).
SECTION 3: ESTIMATION AND REPORTING OF MINERAL RESOURCES
Criteria
Explanation
Database integrity
Samples collected and labelled with permanent marker on
drawstring calico bag. Samples bagged by hole and shipped to
ALS in sealed boxes by TNT Road Transport. Samples stored on
site at the ALS Brisbane facility for the duration of the project.
Data also returned by ALS as non-editable PDF file and editable
.csv file which can be cut and pasted to eliminate keying &
transcription errors. Data is stored in a back up drive at the
Company's office, and also with ALS as a backup.
For personal use only
Site visits
The field program is being conducted by local geologist Mr.
Trevor Mitchell, supervising two field assistants operating the
hand auger. The competent person, Dr Robert Coenraads, was
present for the majority of the sampling program and has visited
the project area six times in order to arrange landholder
Standard Conduct and Compensation Agreements for property
access and oversee the drilling project.
Geological
interpretation
Confidence in the geological interpretation of the mineral
deposit in Camp Creek (Area I) is high because of its simple
geometry and topographic conformity (see Figure 3) - a flat-lying
visible weathering horizon at surface. Drilling to date indicates
there is little to no overburden.
Drilling on a 200m x 200m grid provides confidence that the
geology and mineralisation can be inerpolated between
boreholes containing bauxite accross un-dissected terrain at the
same general elevation with areas of high grade mineralisation
clearly visible and extrapolated from the outer holes at least
200m beyond. Mineralisation at Camp Creek (Area I) was only
previously inferred from hole SJAC052 with the topography/
geomorphology guiding the initial Inferred Resource estimation
with topographic features such as plateaus, ridge tops etc ,
interpreted to be part of the original flat lava surface. Results
from the auger drilling program at Camp Creek have shown the
geological model to be accurate, giving higher confidence to the
other resource areas inferred by the Company elsewhere in
EPM18463.
• Continuity of the mineral deposit is not assumed where the
terrain has been dissected by younger drainages (i.e. around the
plateau edges). Drilling at Camp Creek has also shown this
assumption to be correct - i.e. that the surrounding bauxite has
been eroded away beyond the current plateau edges.
Dimensions
The deposit at Camp Creek is a flat-lying body measuring 3km x
1 km (area of about 2km2 with air core penetration of 6m in hole
SJAC052, and between 0.5 and 1.5m in the 51 auger holes
(SJHA009-SJHA059). Bauxite was encountered in the upper 3
metres of hole SJAC052 and in the 27 out of the 51 auger holes
drilled (i.e. in 54% of the holes drilled).
For personal use only
Estimation and
modelling
techniques
• The model polygons chosen for this analysis are shown in
Figure 3 with the outer boundary being the 5% Rx SiO2 contour.
The 5% Rx SiO2 contour was divided into twelve polygons, each
enclosing between 1 and 4 holes and excluding roads, houses
and other infrastructure. These holes included in the
easternmost 10 polygons were used to create an average grade
of 29.7% Av Al2O3 and 3.2% Rx SiO2 and average thickness of 1.4
m for the model area shown in Figure 3. The drilled shallower
portion of bauxite mineralisation at Camp Creek (i.e. that portion
intersected by air core and auger drilling within the 5% reactive
silica grade contour - and only that in blocks 3 to 12) was chosen
for upgrade to JORC Code Indicated Resource in the current
modelling exercise. Blocks 1 to 2 were not included at the
present time as they would lower the average grade of the
bauxite from grade 29.7% Av Al2O3 3.2% Rx SiO2 to 29.0% Av
Al2O3 3.4% Rx SiO2) nor was the lower grade bauxite lying inside
the 10% reactive silica contour but outside of the 5% contour
included as this would further lower the average to grade 27.0%
Av Al2O3 4.7% Rx SiO2. This remainder of the bauxite body will
not be upgraded until mechanised drilling allows proper
exploration of the deeper parts of the mineralisation. Continuity
of the bauxite mineralisation (Rx SiO2<10%) was confidently
assumed to the edge of that topographic feature with the higher
grade contour (Rx SiO2<5%) lying inside and constrained by the
drilling results. The Rx SiO2 5% contour was extrapolated using a
200m range of influence (or shape of similar area) around <5%
RxSiO2 grade boreholes and only where not constrained to a
lesser distance by the geologic model. Geostatistical analyses of
of the exploration data prepared by Mark Noppe of Xstract
Group show that the 200 m spacing of samples is sufficient to
support the assumption of geological and grade continuity
between the sample points, particularly for Available Alumina
and, although less certain, probably also Reactive Silica. •
Volume calculations were made using the surface area defined
by the 5% reactive SiO2 bauxite grade contour as indicated by
the drilling and topographic constraints multiplied by the average
bauxite thickness of 1.4m calculated for the modelled area. It is
known that that the true average thickness must lie somewhere
in between 3m (SJAC052, the deepest hole) and 1 to 1.5m (the
thickness encountered routinely in the unbottomed holes. For
modelling the the Indicated Resource, those holes that end in
bauxite and are less than the average bauxite thickness of 1.4 m
in depth have been extrapolated down to the average bauxite
depth. In other areas, the depth of the deepest bauxite intercept
has been applied to estimate the thickness of bauxite within that
within each 200m range of influence. Selective units were not
modelled. Assumptions were made aboutmineralisation and
For personal use only
grade continuity between holes spaced at 200m and these
assumptions considered justifiable because of the similarity of
grade values between holes within different parts of the
mineralized area as shown by the variograms.The edges of the
mineralization were controlled by the geologic model (landform
model). Polygon volumes were converted to resource tonnages
using a dry bulk density value of 1.43 dry tonnes per cubic metre
. This figure is an average of three bulk density tests carried out
in different areas across the surface at Camp Creek (Previously it
was assumed that the bulk density of the bauxite had an
approximate value of 1.8, lying within a reasonable bauxite
density range of 1.6-1.9. However following field testing the dry
bulk density, these assumptions proved to be too high, with the
true dry bulk density being more akin to that of soil). Modelling
resulted in a JORC Code Indicated Resource of 1.9Mt of average
grade of 29.7% Av Al2O3 3.2% Rx SiO2 as shown in Table 2
Calculations were checked manually.
Moisture
Preliminary estimates of the “free” or surficial moisture were
obtained as part of the oven drying process. These samples were
collected from the ground surface during an extremely dry
weather period and were weighed before and after oven drying
at 110 degrees C for 3 hours. It is clear that these “surface
moisture” or “air dried moisture”values calculated at the ground
surface will vary with the weather. Loss On Ignition (LOI or water
of crystallisation and volatiles lost at a high temperatures ramped up to 1000 degrees C over a period of 2 hours). Values of
between 18.8 and 23.2% were reurned from 10 XRF analyses
conducted by ALS (including from the 3 one-metre samples of
bauxite from hole SJAC 052 which returned 21.71% (0-1m),
23.23% (1-2m) and 23.04% (2-3).)
For personal use only
Cut-off parameters
A cut-off grade of <20% avail Al2O3 & >10% reactive SiO2) was
used to define the edges of bauxite mineralisation as discussed in
previous announcements. For the purposes of this modelling
exercise, a cut-off grade of Rx SiO2 <5% was used to draw a
contour and define an area/volume and tonnage of average
grade similar to that used in the scoping study prepared by
Sandercock and Associates Pty Ltd, satisfying assumptions that
the bauxite will be marketable under current economic
circumstances, and therefore suitable for initial mining. The
remainder of the bauxite at Camp Creek was not included in the
modelling exercise. This cutoff grade gives a surface area of 0.82
km2 (excluding sealed and infrastructure calculated to be more
valuable than the bauxite itself), and the purposes of volume and
tonnage calculations. The model polygons chosen for this
analysis and shown on Figures 3 and 5 with the outer boundary
being the 5% rx SiO2 contour which encloses all 17 holes with
intervals of bauxite with reactive silica lower than 5%. Twelve
polygons were drawn, each enclosing between 1 and 4 holes,
and these holes were used to create an average grade and
minimum thickness for each polygon. The results of this analysis
give a total of 2.2 Mt for an average thickness of 1.64m and
average grade of 29.0% Av Al2O3 and 3.4% Rx SiO2 and are
shown in Table 2. This is a conservative estimate of thickness as
the tenement average based on all of the bauxite discoveries in
30 out of the 60 air core holes drilled was 1.8m. By subtracting
various polygons from the model, different tonnage and grade
scenarios could be achieved. For the JORC Code Indicated
Resource calculation it was decided to include only 10 of the 12
blocks (blocks 3 to 12 on Figure 3) yielding 1.93 Mt of grade
grade 29.7% AvAl2O3 and 3.2% Rx SiO2 (blocks 4 to 12) This
cutoff grade and careful selection of modellin block allows an
average which meets the requirements of the bauxite modelled
in the scoping study by Sandercock and Associates Pty Ltd.
For personal use only
Mining factors or
assumptions
Mining factors and assumptions are discussed in the
independent scoping study prepared for the Company by
Sandercock and Associates Pty Ltd. Mining at South Johnstone
will be via simple open cut quarrying operations – top soil
stripping ahead of a progressing mining face with progressive
rehabilitation and return to agricultural use behind, according to
an parameters and costs discussed in the study. Ore will be
trucked the short distance to Mourilyan Harbour as a direct
shipping ore (DSO) product. The Sandercock report shows the
mining operation to be viable based on these assumptions. For
the purposes of this modelling exercise, it is assumed that
bauxite below existing infrastructure, principally houses and
sealed roads, will not be mined. It is also assumed that a surface
layer of topsoil and organic matter of approximately 20cm thick
will be stripped and stockpiled for rehabilitation purposes prior
to bauxite mining.
Metallurgical factors
or assumptions
Available alumina and reactive silica results are obtained from
low temperature alkali leach techniques used by ALS laboratories
simulate conditions found in a bauxite refinery.No further
benefits are expected to be achieved via metallurgical treatment,
such as magnetic separation, screening of fines and the bauxite is
most likely to be mined and shipped without further treatment.
High temperature leach trials and XRD work on selected samples,
as reported previously, indicate the bauxite to be predominantly
gibbsitic.The Sandercock and Associates scoping study shows the
mining operation to be viable based on these metallurgical
factors assumptions.
Environmental
factors or
assumptions
No detailed environmental studies have been conducted at
present, although the Company is currently engaging an
environmental consultancy group to begin work in preparation
for mining lease application. The land at Camp Creek is currently
being used for large and small acreage agricultural activities
(principally sugar cane and bananas) and cattle grazing.
It is being assumed that a mining licence would be granted by
government for an open cut extraction operation. Areas of
forest, buffer zones around creeks, road verges and other
infrastructure have been excluded from the resource calculation.
Discussions with landowners have taken place concerning access
of their land for mining purposes and it is being assumed that no
unforeseen environmental difficulties, landholder, or other
issues would impact on the mining and processing operation.
For personal use only
Bulk density
A dry bulk density value of 1.43 dry tonnes per cubic metre was
used for the resource calculations. This figure is an average of
three bulk density tests carried out in different areas across the
surface at Camp Creek as shown in Table 5. Measurements were
made on level areas of hard, compact, unvegetated and
undisturbed surface with sample weights approaching 5kg each
used to minimise measurement error. Samples were taken with a
small spade, weighed on a set of scales with 50 g divisions and
bagged. The neat hole was lined with a thin plastic bag and filled
to the top with water poured in from a measuring bottle with
10ml divisions. Two of the samples were reweighed following
being dried in an oven at 110 degrees C for three hours. It is
proposed to test the bulk density through the entire bauxite
profile at a later stage.
Classification
The JORC Code classification is based on a coverage of holes on a
200m x 200m grid over most of Camp Creek (51 auger holes and
1 aircore hole drilled into a sound geological model with bauxite
recovered in most of those) plus an excellent understanding of
the Modifying Factors of the Mineral Resource, based on the
scoping study prepared by Sandercock and Associates Pty Ltd,
that will come into play in planning for a simple open pit
quarrying and DSO operation (mining, metallurgical,
infrastructure, economic, marketing, legal, environment, social
and government). Based on this understanding, a select portion
of the bauxite mineralisation at Camp Creek (1.9Mt at 29.7% Av
Al2O3 3.2% Rx SiO2) has been classified as a JORC Code Indicated
Resource, the middle JORC Code category of confidence.
Audits or reviews
The mineral resource estimates and modifying factors have been
audited and reviewed in an independent scoping study prepared
by Sandercock and Associates Pty Ltd. Variograms of the drilling
data from Camp Creek were prepared by Mark Noppe of Xstract
Group who also provided advice and reviewed the modelling
discussion and assumptions in JORC Code Table 1
For personal use only
Discussion of
relative
accuracy/confidence
A range of influence of 200m has been applied between holes
based on the interpreted geological and grade continuity and
correlation between holes, together with the support of the
grade continuity at these distances from preliminary
geostatistical analysis. Confidence in these estimates and the
accuracy of the geologic model has enabled a JORC Code
Indicated Resource estimate of 1.9Mt of bauxite grade 29.7 Av
Al2O3 3.2% Rx SiO2. Confidence in the JORC Code Indicated
Resource is high because it is based on results from only the
upper portion of the bauxite mineralisation in the 17 holes used.
It is therefore likely that further work will allow the resource to
be indicated to a greater depth with further exploration. The
relative accuracy and confidence of the estimate is based on drill
holes and landform which involves interpolation and
extrapolation (200m range of influence in most cases, or
distorted ellipse of approximately same area), although this
range is supported by geostatistical analyses of the data.